Posts

Exporters need a good product, a strong brand and to keep innovating

At the Guardian’s ‘Trade Boost’ event in Birmingham, experts offered advice to manufacturers on breaking into new markets.

If you think about whistles at all, you probably think they are, in the words of Simon Topman, “a low-tech, old-fashioned kind of product” without much scope for innovation. But you’d be wrong – as Topman demonstrated to an audience last week by blowing two different whistles: a standard referee’s whistle, followed by a loudly piercing one used at the London Olympics that had delegates nearly jumping out of their skin.

Topman, the chief executive of the 146-year old Acme Whistles, was talking last week at the Guardian’s Trade Boost event in Birmingham, sponsored by UPS. The event was designed to help manufacturing SMEs export their goods and to showcase some success stories. Acme Whistles employs 70 people, has a turnover of £10m a year and does 85% of its business overseas, selling to sectors such as sports and police forces. Key to its success is that it is always innovating. “To be first is to be best,” says Topman. “And even if you’re 146 years old, if you’ve done something new, you are first again.”

Innovation was a recurring theme at the conference, at which delegates heard both about success stories and the challenges of moving into overseas markets. The government has set a target of increasing the size of the British export market to £1 trillion by 2020, and chancellor George Osborne hopes that China will become the UK’s second largest export market by 2025, overtaking Germany.

Speakers from organisations such as UPS, Barclaysand EEF, the manufacturers’ organisation, as well as the China-Britain Business Council and the UK India Business Council, provided expert advice on how manufacturers can break into overseas markets.

Author and journalist Peter Marsh, chairing, delivered the good news: Britain still ranks 10th in the world in terms of manufacturing output and, with 1% of the world’s population, manufactures 2% of its goods. Luis Arriaga, UPS’s district manager for UK, Ireland and Nordics, said British exporters had an advantage because the “Made in Britain” tag is still regarded as a mark of quality: “It’s easier to build on a name that has brand recognition than trying to start from scratch.”

There are 5 million SMEs in Britain, said Arriaga, and research shows that those that export have a higher turnover than those that don’t. There were plenty of businesses on hand to illustrate the point. Katie Cannon, sales director of Sugru, a London-based company that sells a pioneering mouldable glue, told delegates that when the company first launched in 2009, it sold six months’ of stock in six hours. It had to shut down in order to scale up its manufacturing and relaunch in 2010. The company now sells to consumers in 160 countries, mostly through its website. “Manufacturing in London is not the lowest cost base decision the company could make, but it does give us huge amounts of control over quality in the product,” said Cannon.

Exporting isn’t something businesses can simply leap into, however. High-growth markets such as China and India, each with populations of more than a billion, offer huge opportunities, but SMEs should make an effort to understand the regulatory environment and cultural differences first. Topman said Acme Whistles’ second-biggest cost (after labour) is patent litigation: the firm has a constant battle with competitors copying its product.

There is, however, plenty of help on hand, from organisations such as UK Trade & Investment (UKTI) and EEF. Matt Guffey, director of marketing at UPS, emphasised the importance of having an informative website for international customers, including a clear returns policy. When you offer hassle-free returns, he said, customers are more likely to come back. Joseph Jackson, international trade manager at Barclays, offered practical advice on managing cashflow in the early stages through the use of performance bonds and standby letters of credit, which can mitigate the risk of buying and selling overseas.

Will Butler-Adams, chief executive of Brompton, which makes folding bikes, says the company’s approach is to slowly nurture its customers: “When we go to a new territory, it takes a three-to-five-year incubation period before we start seeing the sales.” Rather than slick marketing, the company relies mainly on word-of-mouth to promote its product.

Vernacare, which sells toileting systems to 96% of the UK’s hospitals, was already exporting to Europe when it decided to cast its net wider. Emma Sheldon, global marketing director, told delegates that, after carrying out desk-based research on 150 countries, Vernacare asked UKTI to carry out in-market reports for the top 10, and finally plumped for Singapore – a small country that was easier to “convert”. Within a year, Singapore was providing 13% of Vernacare’s international sales.

The last word goes to Topman, who says that the secret is to have a good product, a strong brand and to keep innovating: “It is still perfectly possible to make a low-cost product in the UK and sell it round the world. In China, there are more whistle makers than anywhere else in the world making them for a tenth of the price, and they’re still buying from us. So it can be done.”

Delegate in the spotlight: Julie Wood of F-Board

Julie Wood was at the conference representing F-Board, an early-stage manufacturing company that has developed a plastic replacement for the traditional scaffolding board. The product, which doesn’t warp or break easily, is much safer than wood scaffolding, as well as more durable and environmentally friendly. The business has broken into a very conservative market and is starting to get orders from overseas.

Wood says the conference provided lots of useful pointers: “Although we’re being chased by several markets, as a small SME your resources are always stretched, so for now it’s enough to choose the lowest-hanging fruit. That’s one of the biggest things I’ve learnt today.”

She felt particularly inspired by Butler-Adams: “I loved the marketing strategy that he had, which was just to use the customers. It encourages me to be even more resourceful.” Neither she nor co-founder Alister Gower has a manufacturing background, but they decided to seize on the opportunity. “I think manufacturing has to move with the times and be more creative and innovative,” she says. “One of the things that came through today was Britain is great. We have unique approaches to business innovation and quality.”

The Guardian Trade Boost: Manufacturing Competition is offering one small business the chance to win a tailored package of media and exporting advice designed to help their business thrive in new markets. Enter here